ETF Inflows & Outflows
Performance Leaders & Laggards
Source: ETF Action; flows and performance data as of 8/29/24; performance data excludes leveraged and inverse products
Weekly ETF Reads
Next-Gen ETFs Buck Vanguard Effect With Fees Near Decade Highs by Emily Graffeo
“Ironically, the more popular passive gets, the crazier and more expensive new products will become.”
Expect advisors’ ETF love affair to continue, says Cerulli by Leo Almazora
“Cerulli said nearly all financial advisors, approximately 90 percent, now use ETFs in some capacity.”
Avantis Wins With DFA Pedigree, Active Management by Debbie Carlson
“With $50 billion in assets under management and only five years of existence, Avantis Investors is one of the exchange-traded fund industry’s biggest success stories.”
Merrill Lynch to triple number of active ETFs on its platforms by Brian Ponte and Alyson Velati
“Merrill’s plans to add more active ETFs are a good reaction to them understanding the evolution of the market.”
Broadening Out Beyond ‘Mag 7’: Equal-Weight ETFs on a Roll by Kirsten Chang
“With investors craving diversification, a handful of equal-weight ETFs have risen to new heights for the year.”
One-Day-Only ETFs Are Jack Bogle’s Nightmare Brought to Life by Katie Greifeld
“MSTX is probably even worse than Jack Bogle’s worst nightmare.”
Ether ETFs Have Bled Money, but That’s Not the Whole Story by Helene Braun
“We anticipate flows into ETH ETFs will continue to climb once wealth managers and financial advisors complete the education process for what ETH is, its utility and why they should hold it alongside their BTC ETF.”
ETF Tweet of the Week
This past week marked one year since Grayscale prevailed in their lawsuit against the SEC. The landmark court ruling vacated the SEC’s order denying Grayscale’s attempt to list a spot bitcoin ETF (despite the fact that the agency had previously allowed futures-based bitcoin ETFs). Judge Rao of the U.S Court of Appeals for the District of Columbia Circuit wrote the following at the time:
“The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products. We therefore grant Grayscale’s petition and vacate the order.”
The spot bitcoin ETF category now boasts $55 billion in assets and has taken in $18 billion in new investor money since debuting in January. Those products were followed by the launch of spot ether ETFs in July. All thanks to Grayscale…
We are proud to have paved the way for US spot #bitcoin and #ethereum funds. 🫡
— Grayscale (@Grayscale) August 29, 2024
Investing involves risk, including possible loss of principal.https://t.co/PE9oLU9RWs
ETF Chart(s) of the Week
I highly recommend reading the first article above regarding ETF fee trends, but the below charts quickly paint the story. New ETF fees are up, while the average asset-weighted ETF fee is down. What gives? Bloomberg’s Eric Balchunas:
“Ironically, the more popular passive gets, the crazier and more expensive new products will become. Because the rest of the portfolio is 10 basis points, people don’t really get that bothered about paying up for something that’s 1%.”
In other words, if 90% of investor’s portfolio is in extremely low cost, plain-Vanilla ETFs, then it’s not a big deal to splurge on “portfolio hot sauce”. And ETF issuers have realized this.
Eric also noted the strong correlation between an ETF’s age, fees, and assets (third chart below).
(Note: Be sure to catch my wide-ranging conversation with Eric on last week’s ETF Prime.)
Source: Bloomberg’s Emily Graffeo
Source: Bloomberg’s Eric Balchunas
